A survey undertaken by the Radicati Group predicts the enterprise instant messaging market to balloon during the next five years, to 349 million users of IM in companies. That's a dramatic increase from the 60 million IM users in the workplace that the Palo Alto, Calif. researchers count at the present day.
The group's survey also finds that while 70 percent of businesses have IM within the workplace, only 26 percent of companies have standardized on a common IM platform.
For vendors, this is obviously important news, chiefly because the figures suggest that corporate America will need to take steps to manage instant messaging use in the workplace -- at least, developing policies and procedures governing IM. At best, businesses can tap IM technology to improve communications and business processes -- turning a potential liability into a productivity-enhancer and bottom-line-improver.
"Lotus Sametime has had a couple of years on everybody, and they are obviously the leading vendors in most regions," said Radicati Group market analyst Genelle Hung. "But with the consumer IM vendors charging in, we do believe that they're going to drive it. And historically, whatever Microsoft jumps on, it tends to take off, and they've certainly made a very big deal of their soon-to-be-released RTC Server."
But the Radicati Group also finds some lukewarm news for vendors: while companies are eager to secure, manage, and log corporate IM, they're willing to pay an average of only $11.95 per user to do so. That's well below the rate card prices asked by many of the largest enterprise IM vendors, including Yahoo! and America Online, who are pushing their own IM management solutions.
The numbers game
But while most market-watchers also see significant growth ahead for the space, it's not clear exactly how big the market is -- and how much room there is for all the vendors now fighting for a piece of the action.
Earlier this year, rival communications analyst firm Ferris Research came out with research suggesting that the business IM market is currently only at about 23 million corporate users. That's a significant improvement from 2002, when the market spanned only about 10 million business users. But San Francisco-based Ferris pegs the space to grow to only 182 million seats by 2007.
At the Yankee Group, Paul Ritter estimates the current number of employees in U.S. business using IM at about 25 million. With a compound annual growth rate of about 150 percent over the next three years, Yankee Group is expecting to see a modest 84 million business IM users by 2006.
"The viral effects of IM utilization will be one of the factors driving growth, and the impact of companies like Reuters, who are essentially giving away IM, will also be a factor," said Ritter, who is program manager of the firm's Internet Business Strategies group.
Based on research from earlier this year, Osterman Research sees the IM landscape evolving from a relatively small arena, in which just over a quarter (26 percent) of business users are on IM, to a far larger market, with 92 percent of workers using IM in 2007.
In spite of the fact that a minority of business users are using instant messaging, the firm found that IM already is in use at 91 percent of businesses. Together, Osterman's findings seem to signal a need for enterprise IM solutions right now, and a potential windfall for vendors able to ride the wave of growth for the next five years.
Michael Osterman, the group's founder and president, said he's leery of setting concrete figures of actual IM users in the workplace, however.
"The number gets a little fuzzy in terms of actual enterprise users -- you have a number of people working from home for instance, and you tend to overestimate the number of users, particularly in this age of lack of interoperability," he said. "People very often use multiple clients."
Analysts point to a confluence of trends and events likely to serve as the impetus for this growth -- however large it turns out to be.
"IT budgets are starting to free up a bit in 2003, and certainly will in 2004," Osterman said. "And IM is really one of the top three initiatives in most companies ... they're looking at their use of consumer-grade IM in enterprises, with its security concerns, lack of namespace control, lack of auditing and logging, and so forth. They have the option of letting consumer IM use continue unfettered and experiencing more and more problems, or they can do something about it by setting up a corporate IM solution ... or implementing some sort of overlay technology."
The onset of interoperability also is seen as furthering the trend.
"What is really going to kick the market off the 2005 timeframe is the introduction of standards-based interoperability," Osterman said. "Once SIP and SIMPLE, which I think will be the standards, are mature and are the adopted standards, the market is really going to take off in the enterprise."
"The market will change significantly when you get interoperability," he added. "So many applications open up, like consumer-facing applications, and integration of presence into lots of other applications will have a significant impact as well."
Meanwhile, IM also is expected to find its way into other parts of the workplace -- providing the foundation for other modes of communication, and through enabling communications within other enterprise apps.
"Going forward with RTC, [Microsoft] likes to think of IM as being a feature of a larger architecture," said IDC Research Manager Robert Mahowald. "There's going to be lots of activity around that paradigm."
Likewise, said Radicati's Hung, "companies are very focused on this instant communication thing and trying to integrate that into various desktop applications,"
If that's the case, predictions that IM will find its way into enterprise applications -- with its own established set of vendors -- leads then to a discussion of which providers are going to emerge on top in the IM space, after a few more years of industry maturation.
The usual suspects?
Yankee Group's Ritter, for one, said he expects to see "significant shake up and shake out of the industry" continuing through the middle of next year. That entails some smaller, newer vendors being put out of business, while vendors with products that look toward the future of IM -- offering presence syndication and application integration, for instance -- are snapped up by some of the larger players in enterprise software.
"The future of enterprise IM is tied directly to the effective integration of presence awareness and real-time chat capabilities into other enterprise applications and mission-critical business activities," he said. "Many of the larger companies 'get it' and are doing a good job at executing on the concept. This week's announcement of the Yahoo!-WebEx deal is an example of this trend, and IBM Lotus has been executing well on integrating presence and IM into their collaboration portals and other applications."
Hung, at the Radicati Group, sees it similarly.
"AOL is going very aggressively for the enterprise market as well, playing on the billions and billions of messages sent daily on their two networks ... and trying to leverage that knowledge of connecting communities -- having various business communities talking to other business communities," she said. "The little guys are going to come in and have huge customers who have an immediate need to solve this intra-corporation communication problem, to increase efficiency, and allow people to send quick messages. But ultimately, the big guys have the power and the customer base -- so they can say, here's a new product, it's going to be integrated with our existing products."
Those sorts of prognostications suggest, to some, then, that the space will settle into a familiar pattern.
"I don't think [the future IM market] is going to be dramatically dissimilar to the e-mail market," Osterman said. "Microsoft and Lotus both control about 40 percent of the market each, with Novell and the rest making up the remaining 20 percent. You'll see probably the same trends in the IM space."
Christopher Saunders is managing editor of InstantMessagingPlanet.com.